Nicolas Sarkozy

BIFF! France has elected a Socialist president on a massive turnout (81.5% certainly shames Britain) - ending Nicolas Sarkozy's rule and also ending a run of right-of-centre victories across Europe. Some say '75% tax-rate Hollande' will be more moderate than on the campaign trail but IDS has warned of a exodus of French entrepreneurs quitting Paris for London. The Socialist candidate wants to re-negotiate the fiscal pact to place more emphasis on growth.

KA-POW! But will France provide the most important election of the day? Greece has also voted and the ruling coalition parties have suffered slumps in support. Anti-austerity parties have prospered in their place. It is far from clear that a stable coalition can emerge from the election outcome and form a government that is able to fulfil commitments made to the IMF.

DING-DING! Two weeks ago the Dutch coalition also collapsed after Geert Wilders looked at opinion polls opposing further EU-mandated spending cuts and withdrew his support from Mark Rutte's minority administration.

BOOM! Unemployment among Spain's youth hit 51.1% earlier this week. 17.4 million people are now out-of-work across the Eurozone.

While the UK media has been obsessing about the Leveson Inquiry the European continent has been denying the two most touted solutions to its economic problems - austerity or, my favoured solution, the break-up of the single currency area. The next few days and weeks might be very crunchy.

Le Pen won 20% of the vote, the left-wing firebrand Melenchon won 11.7% and centrist Bayrou 8.5%.

It's not looking good for Sarkozy. The momentum that he appeared to be enjoying until a fortnight ago hasn't continued and exit polls (which, in France, are usually very accurate) put him 1.7% behind Hollande in round one of the presidential elections. Mr Hollande is hot favourite to win the second round (no opinion poll has suggested Sarkozy can win in a fortnight's time) and end the recent sweep of right-wing parties' victories in the EU's big states.

Denis MacShane MP sees a victory for Hollande as the beginning of the end for what he called a thirty year-old neo-liberal consensus: "If Hollande wins, the victory will be specific to France. But the implications for European politics and for the future of the democratic left are huge. The 30-year neoliberal consensus should have ended with the crash of 2008. Hollande is prepared to challenge today’s orthodoxy. Can Labour do the same in Britain?"

In this morning's Scotland on Sunday Bill Jamieson noted the left-wing nature of Hollande's platform: "A victory for the Left, on a programme of nationalisation, the creation of 60,000 teaching posts, the introduction of a 75 per cent tax rate and substantial increases in public spending, could trigger a serious exodus out of French government bonds, prompting questions as to how France’s debts and deficits are to be funded."

But do British Conservatives really want Sarko to win? David Cameron had endorsed the French leader and declined to meet Hollande. Dan Hannan, however, doesn't see France's current president as much of an ally: "The truth is that France faces a choice between two socialists. Both favour a command economy, a measure of protectionism, entrenched entitlements ('les acquis sociaux'), deeper European integration, and a dirigiste state. No wonder they argue so fiercely about immigration: that's virtually the only area where they disagree. Bonnet blanc et blanc bonnet, as they say in France. Tweedle-Dum and Tweedle-Dumber."

What does the election mean for the €uro? Nobody knows but if Hollande starts to resist austerity the single currency area could enter a new period of grave uncertainty. David Cottle at the Wall Street Journal thinks the "€uro could struggle whoever wins". Matthew Partridge at MoneyWeek adds: "A Hollande victory will leave Germany as the only major supporter of austerity. While this may be good for growth, bond markets will hate it, which will speed up the euro’s demise."

The mood does seem to be shifting in the €urozone. Netherland's rag-tag coalition government has just failed to endorse an austerity budget and fresh elections seem likely. Geert Wilders quit the Dutch coalition after blaming the EU for belt-tightening measures. Reuters reports significant opposition amongst the population to deficit reduction measures that would cut the Dutch deficit from 4.6% of GDP to within the €urozone's required limit of 3%. The Wall Street Journal isn't optimistic that Holland will elect a fiscally conservative coalition in fresh elections.

There could be real trouble ahead for Europe with Merkollande likely to be a very different beast from Merkozy.

The latest opinion polls suggest Sarkozy's 10% deficit in the first round of voting has been eliminated and he's now either neck-and-neck at 30% with the Socialist candidate or even marginally in front. The Socialist François Hollande has a 6% lead in the second round, however.

The election is a vital one for the European Left. They are out of power in every major EU state and France represents their best hope for a comeback. GMB union official Ben Fox at the New Statesman examines the importance of toppling Sarkozy for him and his comrades:

"From the high point in the late 90s when Blair, Schroeder, Prodi and Jospin set the terms of debate in European politics, the centre-left has now been reduced to impotence in opposition, in power in a mere handful of countries....

Although social democrats in Denmark and Slovakia have taken power in the past few months, the defeat of the Zapatero government in Spain meant that the Prime Ministers of the five biggest EU countries – Germany, France, UK, Italy and Spain – are all conservative....

The fight-back needs to start and the French elections will offer a clear indication of whether the European left is bouncing back or in possibly terminal decline. The stakes are high. If Hollande and the Parti Socialiste cannot win when the political odds are stacked in their favour, then the prospects for their sister-parties here and elsewhere will look increasingly bleak."

"Over the past week or so, doubtless fed by the political right, the French media has been filled with reports about Mr Strauss-Kahn’s lifestyle, complete with photographs of his pad in Marrakech and swanky Paris flats. A picture of him getting into a Porsche, belonging to an adviser, set off a fierce and tortured French debate about whether it is possible to be left-wing and rich."

But this decadence hadn't stopped Dominique Strauss-Kahn, or DSK as he's called, building up a healthy opinion poll rating in the battle to become France's next president. The head of the IMF wasn't just the French Socialist party's most popular candidate in their ambition to defeat Nicolas Sarkozy he was - because of his reformist approach to the economy - their only candidate likely to win significant support from the centre.

Then, yesterday, we learnt of DSK's alleged sexual molestation of a hotel maid in a $3,000-a-night New York suite. He has long had a reputation as a womaniser (the internet has educated the French people about their politicians in a way their press never did) but these charges of attempted rape are so serious and wicked that they may have dealt a fatal blow to his chances of winning the battle for the Élysée Palace. Even if he is found not guilty by the US legal process a shadow will now hover over Strauss-Kahn's head for a potentially ruinous period. If he wanted to be the French Socialists' candidate he needed to declare by 13th July.

DSK's plight is also a big blow to the IMF. The international agency is left without its heavyweight boss at a time when urgent decisions are needing to be taken about the Greek economy and the Eurozone.

Sarkozy - with an approval rating of just 20% in some polls - shouldn't be too pleased at his rival's downfall, however, warns the FT (£); "Recent surveys indicate that the far right’s Marine Le Pen may beat Mr Sarkozy in the election’s first round next April and eliminate him from the two-candidate run-off." Next April is a long time away but France would then face an unappetising choice between the extremist Le Pen and an economically regressive socialist candidate.

Public services throughout France have been affected. Trains and flights have been cancelled. Schoolchildren have boycotted classes. Most worryingly for the stability of France, oil refineries have been blockaded - threatening supplies to the nation's petrol stations.

Protests - which the government estimates have involved 1.2 million strikers and which the unions claim have involved 3.5 million - focus on President Sarkozy's pension reforms including a plan to raise the retirement age from 60 to 62.

With majorities in both houses of the French parliament Sarkozy can achieve passage of his reforms but one poll found 71% of voters in sympathy with the strikers. He refuses to compromise, however, describing the reforms as "essential". He is resisting lobbying by unions and the French Left to cover pensions deficits with higher taxes. He says that France already has some of the highest taxes in the developed world and even higher taxes would render the nation uncompetitive.

Francois Fillon, Sarkozy's Prime Minister, said that he would not let the French economy suffocate because of the strikers' targeting of fuel depots. "The right to strike does not mean," he said, "the right to block a fuel depot.” French strikes have become less potent since the ending of strike pay. Walkouts still happen but are now much shorter in duration.

Over recent weeks the embattled French President, Nicolas Sarkozy, has begun a programme of deporting Gypsies. He has claimed claimed that the illegal settlements are breeding
grounds for criminality, including prostitution and common theft. The programme has so far involved riot police closing 100 illegal camps and remove approximately one thousand people. It is popular with French voters.

The EU's Justice Commissioner Viviane Reding (dressed in a fiery red jacket, noted the BBC) pronounced yesterday that the deportations probably breached EU anti-discrimination laws because a memo from the French Ministry of the Interior specifically mentioned "Roma" camps when it instructed regional governors to clear approximately three hundred illegal camps. She said that the Commission would probably take legal action against France within weeks. If the EU courts are as slow as they were at forcing France to lift its illegal ban on British 'Rosbif', a decade ago, France will be empty of Roma, however, before the court rules.

Commissioner Reding invoked the Nazi-era crimes against the Jews in her strident condemnation of Sarkozy. "This is a situation I would have thought Europe would not have to witness again," she said. The Nazis regarded the Roma as "undesirables" and deported many to concentration camps where they perished.

The French Minister for Europe rejected Ms Reding's attack. "France is a big sovereign country," Pierre Lellouche said, "we're not at school."

***

Sarkozy was the cover feature in last week's Economist. The weekly magazine charted how he had become a much diminished figure since he was first elected:

"When Nicolas Sarkozy first burst into the French political consciousness he was unlike any other recent leader the country had known. He dared to tell the French what they did not care to hear: that they should work more, take more risks, promote more ethnic minorities, be nicer to America. He was not afraid to roll up his sleeves, confront his opponents and court unpopularity. He balanced firmness on immigration from abroad with fairness towards ethnic minorities at home. Never a fully fledged liberal, he nonetheless had enough liberal reflexes to understand that the French could preserve the best of their way of life only through reform..."

But now:

"What a shrunken version of that politician now occupies the presidency. Little more than three years into his five-year term, Mr Sarkozy seems to be a shadow of the reformer he once was on economic affairs and a caricature of the tough-cop leader on social matters. He bashes capitalism with one hand and now Roma (gypsies) with the other. His popularity has collapsed, the opposition Socialists are breathing down his neck and a series of mini-scandals has damaged his standing. Even his own camp has begun to doubt that he still has what it takes to carry them to victory again in 2012."

Dominique de Villepin (pictured) is most famous outside of France for taking on George W Bush at the United Nations - representing France's then President, Jacques Chirac, in opposition to the Iraq war. M. de Villepin is not a big fan of America full stop. In a book of poetry entitled The Shark and the Seagull, America was, yes, the shark.

But if de Villepin doesn't like America he is said to loathe President Nicolas Sarkozy. Once the two biggest beasts in the UMP under Chirac they both fell out and de Villepin was only recently found not guilty by a French court after being accusing of running a smear campaign against Sarkozy. He may yet face a re-trial.

On Sunday de Villepin launched a new right-wing movement - République Solidaire. République Solidaire is expected to be the fundraiser for DdV's presidential challenge to M. Sarkozy. An Ifop poll for Paris-Match found that DdV had an approval rating of 49%; significantly better than his right-wing foe, on just 37%.

At the new movement's launch - attended by three thousand and more sympathisers - the crowd repeatedly chanted 'President Villepin!' Dominique de Villepin used the launch to attack French involvement in Afghanistan, Sarkozy's decision for France to rejoin NATO and also free trade. He also accused the French President of encouraging anti-immigrant sentiment. Sarkozy's own family originated from Hungary.

DdV is as aristocratic as Sarkozy is an outsider. Although he has held posts in France's Cabinet - leading to him becoming Chirac's Prime Minister, DdV has never been elected. A graduate of the École Nationale he rose smoothly through the French polical system, always by appointment, until the recent trial produced a five year wilderness period. It is not clear if he has the popular touch to convert his approval ratings into real votes.

The Telegraph's Kim Wilsher summarises the differences between the two men:

"That the two men hail from the centre Right of French politics, confirms the
French saying that your worst enemy will come from your side. Both may lay
claim to be the rightful heirs of General de Gaulle, as both have done in
recent days, but they are polar opposites to the point of caricature:
psychologically, physically and politically. Mr de Villepin is tall, fop-haired, distinguished; Mr Sarkozy is short, sharp
and twitchy. Mr de Villepin thinks, Mr Sarkozy acts. Mr de Villepin dreams
and deconstructs, Mr Sarkozy builds and bulldozes. One is Rimbaud, the other
Rambo. They are opposites that repel rather than attract."

According to Le Figaro, the French President is said to have said "He'll start out eurosceptic and finish up pro-European. It's the rule. He'll be like all the others."

Other European leaders were less direct in their reaction to Mr Cameron becoming Prime Minister.

Jose Manuel Barroso, the president of the European Commission in Brussels and a centre-right free market liberal, was positive: "I've met David Cameron many times. I'm sure we'll have a good working relationship."

Edward McMillan-Scott MEP, who joined the Liberal Democrats earlier this year after his expulsion from the Conservative Party said "this coalition will constrain the eurosceptic tendencies in the Tory party."

"What is new to coalition politics in this country is the European dimension. The Lib Dems are Europhile to the point of fanaticism. If it comes from Brussels it must be right. The very DNA of Mr Clegg, his family connections to the wealthy European establishment and his Brussels career will always guide him to favour the EU rather than this country, but the Tories are a patriotic party. When the fatal split brings the coalition to an end, it will probably be over Europe."

"Even before the financial crisis, reform was piecemeal; the government tinkered with the tax system and gave universities greater autonomy, neither of which could stem rising public-sector debt. Since the financial crisis struck in 2007, reform has slowed further, with the government unwilling to risk recovery by cutting public spending. The main reform currently in the works is a plan to increase the minimum retirement age from 60 by a yet-to-be determined number of years. Mr. Sarkozy also floated the idea of a social value-added tax designed to shift the burden of financing welfare payments from companies to consumers and imports. The risk is that even these may now be sacrificed as part of Mr. Sarkozy's backpedalling on reform."

Strong showings by Jean-Marie Le Pen's National Front in the regional elections - 11.7% overall and nearly 20% in two regions - call into question Sarkozy's high profile debate on national identity. It was meant to squash the NF but it only served to raise the salience of their issues.

Sarkozy faces re-election in 2012. Rumours about his marriage to Carla Bruni now dog him at every turn. More significantly the socialists have a new spring in their step. They will hope to consolidate their gains next Sunday, in the second round of voting. Projections suggest socialist-green ccoalitions will win 20 of 22 contests. But it's always easier to be an opposition than a government-in-waiting. As The Economist noted, the socialists' "pitch to the electorate has not been clear". It concluded: "Voters may have been expressing their disillusion with Mr Sarkozy as much as any faith that the Socialists could do better."